June 19, 2017 / 4:16 PM / a month ago

UPDATE 1-France's Cristal Union says dry weather to hit sugar output

3 Min Read

* Large parts of EU saw dry, hot weather in recent weeks

* More forecast, notably in top EU sugar beet grower France

* Cristal Union CEO sees drop in sugar content of beet

* End to EU quotas in October were expected to boost output (Adds details throughout, quotes)

By Sybille de La Hamaide

PARIS, June 19 (Reuters) - Cristal Union, the European Union's fourth largest sugar producer, said on Monday its sugar production and exports would likely be lower than expected because of weeks of dry weather in Europe.

The French cooperative group had initially forecast exports in the 2017/2018 campaign of 600,000 to 700,000 tonnes, up from 200,000 to 300,000 tonnes under EU quotas rules on output and exports. Those rules end in October.

"We had prepared for 600,000 to 700,000 tonnes, we will likely have less," Chief Executive Officer Alain Commissaire told Reuters.

He said it was too early to give a precise estimate for production or exports from Cristal Union's 170,000 hectares of beet but the sugar content - a key factor for sugar producers - had been hit and could fall further if weather remained dry.

"If we have the hot weather forecast for the next two weeks, we'll fall to 13 tonnes per hectare (t/ha) from 14 tonnes currently," he said, after the firm had originally forecast sugar content of 15.5 t/ha at the start of the season.

A further drop could be averted if rains arrived, he said.

Lower output from Cristal Union and other EU producers could prompt forecasters to revise down estimates for a global sugar surplus this year that has kept ICE sugar prices near 16-months lows. This follow two years of sugar deficits.

Forecasts for a surplus were partly driven by expectations of a jump in EU output as producers planted more beet to take advantage of an end to EU quotas. Cristal Union expanded its planting area by 25 percent from last year with the aim to harvest 17 million tonnes of sugar beet in 2017.

Commissaire said some forecasters had predicted 4 million to 4.5 million tonnes of extra EU output, but he said "there may not even be 2 million tonnes more with what we are seeing now."

For now, forecasters expect the EU to produce 18.3 million tonnes of sugar in 2017/18, with exports of 2.7 million tonnes.

The EU is the world's leading beet grower, with about 50 percent share. But beet sugar represents just 20 percent of world sugar output with the rest coming from cane, EU data show.

The French cooperative group has made the Mediterranean basin a priority, mainly through partnerships with sugar distributors and refiners in the region. It operates in Italy, Algeria, Croatia, Greece, Spain.

Reporting by Sybille de La Hamaide; Writing by Gus Trompiz; Editing by Edmund Blair

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